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| 8-K - 8-K - ServiceNow, Inc. | now_xform8-kq22013earnings.htm |
EXHIBIT 99.1
ServiceNow Reports Financial Results for Second Quarter 2013
Second Quarter Revenues Exceed $100 Million and Grew 80% Year-over-Year
SAN DIEGO – July 31, 2013 – ServiceNow® (NYSE: NOW), the enterprise IT cloud company, today announced its financial results for its second quarter of 2013.
Second quarter 2013 results:
• | Revenues of $102.2 million, an increase of 80% compared to the second quarter of 2012, and an increase of 19% from the first quarter of 2013. |
• | A GAAP net loss for the quarter of $21.4 million, or a loss of $0.16 per basic and diluted share, compared to a GAAP net loss of $8.7 million, or a loss of $0.32 per basic and diluted share, in the second quarter of 2012. |
• | A non-GAAP net loss for the quarter of $7.8 million, or a loss of $0.06 per basic and diluted share, compared to a non-GAAP net loss of $1.6 million, or a loss of $0.06 per basic and diluted share, in the second quarter of 2012 (see the table entitled "Results of Operations GAAP to Non-GAAP Reconciliation” for a reconciliation of these GAAP and non-GAAP financial measures). |
• | Deferred revenue of $210.0 million, an 8% increase over the $194.8 million reported at the end of the prior quarter. |
• | Billings were $117.5 million, a 6% increase over the $110.3 million reported in the previous quarter and a 63% increase over the $72.1 million in the same period last year (see the table entitled “Non-GAAP Billings Reconciliation” for a reconciliation of non-GAAP billings to GAAP revenues). |
“In the second quarter we added 138 new customers, bringing our cumulative customer count to 1,778 worldwide, achieved a customer renewal rate of 94.2%, and continued to penetrate our installed base with upsells comprising 25% of our total annual contract value signed during the quarter,” said Frank Slootman, president and chief executive officer, ServiceNow. “We also hosted nearly 4,000 attendees at our annual user conference, Knowledge, and announced several key product innovations.”
“ServiceNow crossed the $100 million revenue mark for the first time with $102.2 million in total revenue in the quarter, and billed $117.5 million, our second consecutive quarter in excess of $100 million,” added Michael Scarpelli, chief financial officer, ServiceNow. “In addition, we generated $9.7 million in operating cash flow in the quarter.”
Financial Outlook
The non-GAAP financial guidance discussed below excludes stock-based compensation expense and the related income tax effect (see table which reconciles these non-GAAP financial measures to the related GAAP measures). We completed the acquisition of Mirror42 on July 1, 2013 and incorporated the expected revenues and operating expenses associated with the acquisition in our guidance. The accounting treatment for the acquisition is pending completion and therefore we have excluded the related amortization of acquired intangible assets, acquisition-related expenses, and income tax expense from our guidance for the third quarter. In the future, we will include these acquisition related expenses in our non-GAAP results. Negative numbers are shown in parentheses.
For the third quarter of 2013, we expect:
• | Total revenues between $104 and $106 million, representing year-over-year growth between 62% and 65%. Our total third quarter revenue estimate consists of subscription revenues between $88 and $89 million and professional services and other revenues between $16 and $17 million. |
• | Subscription gross margin of approximately 75%, professional services and other gross margin between 7% and 9%, and overall gross margin of approximately 65%. |
• | Operating margin between (3%) and (2%). |
• | A net loss per basic and diluted share between ($0.03) and ($0.02) with weighted-average shares outstanding of approximately 137.5 million. |
For the full year 2013, we expect revenues to be in the range of $406 to $410 million, representing year-over-year growth between 67% and 68%. Our total annual revenues estimate consists of subscription revenues between $337 and $339 million and professional services and other revenues between $69 and $71 million.
Updates since our last earnings release:
• | In May, ServiceNow hosted Knowledge13™, our annual global user conference, in Las Vegas. With nearly 4,000 attendees, doubling last year’s attendance, Knowledge is the largest gathering of IT professionals using cloud services to transform service delivery across the enterprise. |
• | In May, ServiceNow announced: |
◦ | ServiceNow App Creator enabling ‘citizen developers’ to easily create intuitive enterprise applications on the ServiceNow Service Automation Platform. |
◦ | ServiceNow for iPad which provides IT with the ability to view and interact with their work anytime, anywhere. |
◦ | ServiceNow Cloud Provisioning, a new orchestration application that enables IT to automate the entire cloud management lifecycle. |
◦ | ServiceNow CMDB data certification, a new capability in the ServiceNow CMDB (Configuration Management Database) that ensures data remains accurate, current and relevant. |
• | In July, ServiceNow announced the acquisition of Mirror42. The new ServiceNow Performance Analytics product provides users with Key Performance Indicator (KPI)-driven dashboards and scorecards that work transparently with all ServiceNow applications. |
Conference Call Details
The conference call will begin at 2:00 p.m. Pacific Time (21:00 GMT) on Wednesday, July 31, 2013. Interested parties may listen to the call by dialing 866.270.6057 (passcode: 37292950), or if outside North America, by dialing 617.213.8891 (passcode: 37292950). Individuals may access the live teleconference from the investor relations section of the ServiceNow website at http://investors.servicenow.com. The webcast will be archived for a period of 30 days.
An audio replay of the conference call and webcast will be available two hours after its completion and will be accessible for 30 days. To hear the replay, interested parties may go to the investor relations section of the ServiceNow website or dial 888.286.8010 (passcode: 11018243), or if outside North America, by dialing 617.801.6888 (passcode: 11018243)
Statement regarding use of non-GAAP financial measures
The company reports non-GAAP results for gross margins, operating margins, net income or loss, basic and diluted income or loss per share, free cash flow and billings in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
The company’s financial measures under GAAP include stock-based compensation expense and adjustments for capitalized software. Management believes the presentation of operating results that excludes these items provides useful supplemental information to investors and facilitates the analysis of the company’s core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing the company’s past and future operating performance.
Free cash flow, which is a non-GAAP financial measure, is calculated as GAAP net cash provided by operating activities reduced by purchases of property and equipment. Management believes information regarding free cash flow provides investors with an important perspective on the cash available to invest in our business and fund ongoing operations. However, our calculation of free cash flow may not be comparable to similar measures used by other companies.
Billings is calculated as revenue plus the change in total deferred revenue. Management believes billings offers investors useful supplemental information regarding the performance of our business, and will help investors better understand the sales volumes and performance of our business.
The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.
Use of forward looking statements
This release contains “forward-looking statements” regarding our performance, including in the section entitled “Financial Outlook.” Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove
incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.
Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are: (i) errors, interruptions, delays, or security breaches in or of our service or web hosting, (ii) our ability to grow at our expected rate of growth, including our ability to convert deferred revenue and backlog into revenue, add and retain customers, and enter new geographies and markets, (iii) our ability to continue to release, and gain customer acceptance of, improved versions of our services, (iv) our ability to develop and gain customer acceptance of new products and services, including our platform, and (v) our ability to compete successfully against existing and new competitors.
Further information on these and other factors that could affect our financial results are included in our Form 10-K for the year ended December 31, 2012 and in other filings we make with the Securities and Exchange Commission from time to time, including our Form 10-Q that will be filed for the second quarter ended June 30, 2013.
We undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.
About ServiceNow
ServiceNow is the enterprise IT cloud company. We focus on transforming enterprise IT by automating and standardizing business processes and consolidating IT across the global enterprise. Organizations deploy our service to create a single system of record for enterprise IT, lower operational costs and enhance efficiency. Additionally, our customers use our extensible platform to build custom applications for automating activities unique to their business requirements. For more information, visit www.servicenow.com.
# # #
ServiceNow and the ServiceNow logo are registered trademarks of ServiceNow. Knowledge is a trademark of ServiceNow. All other brand and product names are trademarks or registered trademarks of their respective holders.
Media Contacts:
Liza S. Goldberg
ServiceNow
408.501.8553
liza.goldberg@servicenow.com
Kim McCrossen
Schwartz MSL
781.684.6253
servicenow@schwartzmsl.com
Investor Contact:
ir@servicenow.com
ServiceNow, Inc. | |||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||
(in thousands, except share and per share data) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||||||
Revenues: | |||||||||||||||||||
Subscription | $ | 80,376 | $ | 46,820 | $ | 151,934 | $ | 86,361 | |||||||||||
Professional services and other | 21,846 | 9,954 | 36,227 | 17,844 | |||||||||||||||
Total revenues | 102,222 | 56,774 | 188,161 | 104,205 | |||||||||||||||
Cost of revenues (1): | |||||||||||||||||||
Subscription | 20,219 | 14,239 | 38,531 | 25,251 | |||||||||||||||
Professional services and other | 15,779 | 8,652 | 29,775 | 18,876 | |||||||||||||||
Total cost of revenues | 35,998 | 22,891 | 68,306 | 44,127 | |||||||||||||||
Gross profit | 66,224 | 33,883 | 119,855 | 60,078 | |||||||||||||||
Operating expenses (1): | |||||||||||||||||||
Sales and marketing | 52,291 | 26,909 | 90,517 | 46,216 | |||||||||||||||
Research and development (2) | 17,951 | 9,272 | 33,990 | 15,315 | |||||||||||||||
General and administrative | 15,325 | 6,819 | 27,604 | 13,246 | |||||||||||||||
Total operating expenses | 85,567 | 43,000 | 152,111 | 74,777 | |||||||||||||||
Loss from operations | (19,343 | ) | (9,117 | ) | (32,256 | ) | (14,699 | ) | |||||||||||
Interest and other income (expense), net | (1,323 | ) | 41 | (1,204 | ) | 533 | |||||||||||||
Loss before provision for (benefit from) income taxes | (20,666 | ) | (9,076 | ) | (33,460 | ) | (14,166 | ) | |||||||||||
Provision for (benefit from) income taxes | 739 | (352 | ) | 1,303 | 198 | ||||||||||||||
Net loss | $ | (21,405 | ) | $ | (8,724 | ) | $ | (34,763 | ) | $ | (14,364 | ) | |||||||
Net loss attributable to common stockholders - Basic and Diluted | $ | (21,405 | ) | $ | (8,878 | ) | $ | (34,763 | ) | $ | (14,672 | ) | |||||||
Net loss per share attributable to common stockholders: | |||||||||||||||||||
Basic | $ | (0.16 | ) | $ | (0.32 | ) | $ | (0.26 | ) | $ | (0.55 | ) | |||||||
Diluted | $ | (0.16 | ) | $ | (0.32 | ) | $ | (0.26 | ) | $ | (0.55 | ) | |||||||
Weighted-average shares used to compute net loss per share attributable to common stockholders: | |||||||||||||||||||
Basic | 134,454,085 | 27,788,547 | 132,298,095 | 26,452,100 | |||||||||||||||
Diluted | 134,454,085 | 27,788,547 | 132,298,095 | 26,452,100 | |||||||||||||||
(1) Includes total stock-based compensation expense for stock-based awards as follows: | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||||||
Cost of revenues: | |||||||||||||||||||
Subscription | $ | 1,996 | $ | 706 | $ | 3,790 | $ | 1,238 | |||||||||||
Professional services and other | 1,065 | 277 | 1,886 | 469 | |||||||||||||||
Sales and marketing | 4,822 | 2,482 | 8,807 | 3,953 | |||||||||||||||
Research and development | 3,715 | 1,541 | 6,829 | 2,202 | |||||||||||||||
General and administrative | 3,230 | 1,451 | 5,562 | 2,513 | |||||||||||||||
(2) The Company recorded an out of period adjustment during the quarter ended June 30, 2012 to reflect the correction of an immaterial error related to software development costs of $0.7 million that was improperly capitalized during the quarter ended March 31, 2012. The correction of this error had no effect on the results of operations for the six months ended June 30, 2012. | |||||||||||||||||||
ServiceNow, Inc. | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(in thousands) | ||||||||||
June 30, 2013 | December 31, 2012 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 120,233 | $ | 118,989 | ||||||
Short-term investments | 133,547 | 195,702 | ||||||||
Accounts receivable, net | 92,765 | 78,163 | ||||||||
Current portion of deferred commissions | 21,171 | 14,979 | ||||||||
Prepaid expenses and other current assets | 9,093 | 14,256 | ||||||||
Total current assets | 376,809 | 422,089 | ||||||||
Deferred commissions, less current portion | 13,786 | 11,296 | ||||||||
Long-term investments | 92,342 | — | ||||||||
Property and equipment, net | 57,253 | 42,342 | ||||||||
Other assets | 2,143 | 2,387 | ||||||||
Total assets | $ | 542,333 | $ | 478,114 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 10,016 | $ | 9,604 | ||||||
Accrued expenses and other current liabilities | 46,791 | 48,059 | ||||||||
Current portion of deferred revenue | 192,365 | 153,964 | ||||||||
Total current liabilities | 249,172 | 211,627 | ||||||||
Deferred revenue, less current portion | 17,675 | 16,397 | ||||||||
Other long-term liabilities | 7,591 | 6,685 | ||||||||
Stockholders’ equity | 267,895 | 243,405 | ||||||||
Total liabilities and stockholders’equity | $ | 542,333 | $ | 478,114 | ||||||
ServiceNow, Inc. | |||||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||
Net loss | $ | (21,405 | ) | $ | (8,724 | ) | $ | (34,763 | ) | $ | (14,364 | ) | |||||||||||
Adjustments to reconcile net loss to net cash | |||||||||||||||||||||||
provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | 5,339 | 2,826 | 9,703 | 4,872 | |||||||||||||||||||
Amortization of premiums on investments | 1,138 | 98 | 2,233 | 98 | |||||||||||||||||||
Amortization of deferred commissions | 6,631 | 3,001 | 11,997 | 5,344 | |||||||||||||||||||
Stock-based compensation | 14,828 | 6,457 | 26,874 | 10,375 | |||||||||||||||||||
Tax benefit from exercise of stock options | (720 | ) | 703 | (2,571 | ) | (257 | ) | ||||||||||||||||
Deferred tax assets | — | (174 | ) | — | (174 | ) | |||||||||||||||||
Bad debt expense | 304 | — | 587 | — | |||||||||||||||||||
Lease abandonment costs | 28 | — | 326 | — | |||||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||||||
Accounts receivable | (12,953 | ) | (4,781 | ) | (15,891 | ) | (2,723 | ) | |||||||||||||||
Deferred commissions | (11,511 | ) | (7,823 | ) | (20,780 | ) | (13,076 | ) | |||||||||||||||
Prepaid expenses and other current assets | 1,924 | 1,031 | 5,842 | 5,203 | |||||||||||||||||||
Other assets | (17 | ) | (1,882 | ) | (247 | ) | (1,956 | ) | |||||||||||||||
Accounts payable | 1,346 | (470 | ) | (125 | ) | 963 | |||||||||||||||||
Accrued expenses and other current liabilities | 9,294 | 915 | 282 | 1,960 | |||||||||||||||||||
Deferred revenue | 14,845 | 15,764 | 40,574 | 26,786 | |||||||||||||||||||
Other long-term liabilities | 665 | (2 | ) | 718 | (33 | ) | |||||||||||||||||
Net cash provided by operating activities | 9,736 | 6,939 | 24,759 | 23,018 | |||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Purchases of property and equipment | (11,820 | ) | (11,668 | ) | (22,235 | ) | (20,226 | ) | |||||||||||||||
Purchases of investments | (128,817 | ) | (8,575 | ) | (184,763 | ) | (23,919 | ) | |||||||||||||||
Sale of investments | 43,298 | 1,025 | 43,298 | 1,025 | |||||||||||||||||||
Maturities of investments (1) | 52,101 | — | 107,451 | — | |||||||||||||||||||
Restricted cash | (163 | ) | — | (163 | ) | 8 | |||||||||||||||||
Net cash used in investing activities | (45,401 | ) | (19,218 | ) | (56,412 | ) | (43,112 | ) | |||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Payment of follow-on offering costs | — | — | (698 | ) | — | ||||||||||||||||||
Proceeds from employee stock plans | 10,362 | 832 | 31,830 | 2,133 | |||||||||||||||||||
Proceeds from early exercise of stock options, net | — | 137 | — | 1,024 | |||||||||||||||||||
Tax benefit from exercise of stock options | 720 | (703 | ) | 2,571 | 257 | ||||||||||||||||||
Net proceeds from issuance of common stock | — | — | — | 17,848 | |||||||||||||||||||
Purchases of common stock and restricted stock from | |||||||||||||||||||||||
stockholders | — | (891 | ) | — | (1,960 | ) | |||||||||||||||||
Offering costs in connection with initial public offering | — | (1,164 | ) | — | (1,164 | ) | |||||||||||||||||
Net cash provided by (used in) financing activities | 11,082 | (1,789 | ) | 33,703 | 18,138 | ||||||||||||||||||
Foreign currency effect on cash and cash equivalents | 34 | (590 | ) | (806 | ) | (650 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (24,549 | ) | (14,658 | ) | 1,244 | (2,606 | ) | ||||||||||||||||
Cash and cash equivalents at beginning of period | 144,782 | 80,140 | 118,989 | 68,088 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 120,233 | $ | 65,482 | $ | 120,233 | $ | 65,482 | |||||||||||||||
Calculation of free cash flow (a non-GAAP measure): | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 9,736 | $ | 6,939 | $ | 24,759 | $ | 23,018 | |||||||||||||||
Purchases of property and equipment | (11,820 | ) | (11,668 | ) | (22,235 | ) | (20,226 | ) | |||||||||||||||
Free cash flow | $ | (2,084 | ) | $ | (4,729 | ) | $ | 2,524 | $ | 2,792 | |||||||||||||
(1) In the six months ended June 30, 2013, maturities of investments includes the effect of the correction of an immaterial error of $3.0 million related to securities that were improperly classified as short-term investments instead of cash and cash equivalents as of December 31, 2012. | |||||||||||||||||||||||
ServiceNow, Inc. | |||||||||||||||||||||||||
Results of Operations GAAP to Non-GAAP Reconciliation | |||||||||||||||||||||||||
(in thousands except share and per share data) | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
June 30, 2013 | June 30, 2012 | ||||||||||||||||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | ||||||||||||||||||||
Reconciliation of gross profit: | |||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Subscription | $ | 80,376 | — | $ | 80,376 | $ | 46,820 | — | $ | 46,820 | |||||||||||||||
Professional services and other | 21,846 | — | 21,846 | 9,954 | — | 9,954 | |||||||||||||||||||
Total revenues | 102,222 | — | 102,222 | 56,774 | — | 56,774 | |||||||||||||||||||
Cost of revenues (1): | |||||||||||||||||||||||||
Subscription | 20,219 | (1,996 | ) | 18,223 | 14,239 | (706 | ) | 13,533 | |||||||||||||||||
Professional services and other | 15,779 | (1,065 | ) | 14,714 | 8,652 | (277 | ) | 8,375 | |||||||||||||||||
Total cost of revenues | 35,998 | (3,061 | ) | 32,937 | 22,891 | (983 | ) | 21,908 | |||||||||||||||||
Gross profit: | |||||||||||||||||||||||||
Subscription | 60,157 | 1,996 | 62,153 | 32,581 | 706 | 33,287 | |||||||||||||||||||
Professional services and other | 6,067 | 1,065 | 7,132 | 1,302 | 277 | 1,579 | |||||||||||||||||||
Total gross profit | $ | 66,224 | $ | 3,061 | $ | 69,285 | $ | 33,883 | $ | 983 | $ | 34,866 | |||||||||||||
Reconciliation of operating expenses: | |||||||||||||||||||||||||
Operating expenses (1): | |||||||||||||||||||||||||
Sales and marketing | $ | 52,291 | $ | (4,822 | ) | $ | 47,469 | $ | 26,909 | $ | (2,482 | ) | $ | 24,427 | |||||||||||
Research and development (2) | 17,951 | (3,715 | ) | 14,236 | 9,272 | (2,273 | ) | 6,999 | |||||||||||||||||
General and administrative | 15,325 | (3,230 | ) | 12,095 | 6,819 | (1,451 | ) | 5,368 | |||||||||||||||||
Total operating expenses | $ | 85,567 | $ | (11,767 | ) | $ | 73,800 | $ | 43,000 | $ | (6,206 | ) | $ | 36,794 | |||||||||||
Reconciliation of loss from operations, provision for (benefit from) income taxes, net loss, net loss per share, and pro forma net loss per share: | |||||||||||||||||||||||||
Loss from operations | $ | (19,343 | ) | $ | 14,828 | $ | (4,515 | ) | $ | (9,117 | ) | $ | 7,189 | $ | (1,928 | ) | |||||||||
Loss before provision for (benefit from) income taxes | $ | (20,666 | ) | $ | 14,828 | $ | (5,838 | ) | $ | (9,076 | ) | $ | 7,189 | $ | (1,887 | ) | |||||||||
Provision for (benefit from) income taxes (1), (2) | 739 | 1,253 | 1,992 | (352 | ) | 110 | (242 | ) | |||||||||||||||||
Net loss | $ | (21,405 | ) | $ | 13,575 | $ | (7,830 | ) | $ | (8,724 | ) | $ | 7,079 | $ | (1,645 | ) | |||||||||
Net loss attributable to common stockholders - Basic and Diluted | $ | (21,405 | ) | $ | 13,575 | $ | (7,830 | ) | $ | (8,878 | ) | $ | 7,079 | $ | (1,799 | ) | |||||||||
Net loss per share attributable to common stockholders: | |||||||||||||||||||||||||
Basic | $ | (0.16 | ) | $ | 0.10 | $ | (0.06 | ) | $ | (0.32 | ) | $ | 0.26 | $ | (0.06 | ) | |||||||||
Diluted | $ | (0.16 | ) | $ | 0.10 | $ | (0.06 | ) | $ | (0.32 | ) | $ | 0.26 | $ | (0.06 | ) | |||||||||
Weighted-average shares used to compute net loss per share attributable to common stockholders: | |||||||||||||||||||||||||
Basic | 134,454,085 | — | 134,454,085 | 27,788,547 | — | 27,788,547 | |||||||||||||||||||
Diluted | 134,454,085 | — | 134,454,085 | 27,788,547 | — | 27,788,547 | |||||||||||||||||||
(1) Adjustments include stock-based compensation and the related tax effect. (2) Adjustment includes $0.7 million of additional research and development expenses, and the related tax effect, that were recorded during the quarter ended June 30, 2012 for the correction of an immaterial error related to software development costs that were improperly capitalized during the quarter ended March 31, 2012. | |||||||||||||||||||||||||
ServiceNow, Inc. | |||||||||||||||||||||||||
Results of Operations GAAP to Non-GAAP Reconciliation | |||||||||||||||||||||||||
(in thousands except share and per share data) | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Six Months Ended | |||||||||||||||||||||||||
June 30, 2013 | June 30, 2012 | ||||||||||||||||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | ||||||||||||||||||||
Reconciliation of gross profit: | |||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Subscription | $ | 151,934 | — | $ | 151,934 | $ | 86,361 | — | $ | 86,361 | |||||||||||||||
Professional services and other | 36,227 | — | 36,227 | 17,844 | — | 17,844 | |||||||||||||||||||
Total revenues | 188,161 | — | 188,161 | 104,205 | — | 104,205 | |||||||||||||||||||
Cost of revenues (1): | |||||||||||||||||||||||||
Subscription | 38,531 | (3,790 | ) | 34,741 | 25,251 | (1,238 | ) | 24,013 | |||||||||||||||||
Professional services and other | 29,775 | (1,886 | ) | 27,889 | 18,876 | (469 | ) | 18,407 | |||||||||||||||||
Total cost of revenues | 68,306 | (5,676 | ) | 62,630 | 44,127 | (1,707 | ) | 42,420 | |||||||||||||||||
Gross profit: | |||||||||||||||||||||||||
Subscription | 113,403 | 3,790 | 117,193 | 61,110 | 1,238 | 62,348 | |||||||||||||||||||
Professional services and other | 6,452 | 1,886 | 8,338 | (1,032 | ) | 469 | (563 | ) | |||||||||||||||||
Total gross profit | $ | 119,855 | $ | 5,676 | $ | 125,531 | $ | 60,078 | $ | 1,707 | $ | 61,785 | |||||||||||||
Reconciliation of operating expenses: | |||||||||||||||||||||||||
Operating expenses (1): | |||||||||||||||||||||||||
Sales and marketing | $ | 90,517 | $ | (8,807 | ) | $ | 81,710 | $ | 46,216 | $ | (3,953 | ) | $ | 42,263 | |||||||||||
Research and development | 33,990 | (6,829 | ) | 27,161 | 15,315 | (2,202 | ) | 13,113 | |||||||||||||||||
General and administrative | 27,604 | (5,562 | ) | 22,042 | 13,246 | (2,513 | ) | 10,733 | |||||||||||||||||
Total operating expenses | $ | 152,111 | $ | (21,198 | ) | $ | 130,913 | $ | 74,777 | $ | (8,668 | ) | $ | 66,109 | |||||||||||
Reconciliation of loss from operations, provision for income taxes, net loss, net loss per share, and pro forma net loss per share: | |||||||||||||||||||||||||
Loss from operations | $ | (32,256 | ) | $ | 26,874 | $ | (5,382 | ) | $ | (14,699 | ) | $ | 10,375 | $ | (4,324 | ) | |||||||||
Loss before provision for income taxes | $ | (33,460 | ) | $ | 26,874 | $ | (6,586 | ) | $ | (14,166 | ) | $ | 10,375 | $ | (3,791 | ) | |||||||||
Provision for income taxes (1) | 1,303 | 1,792 | 3,095 | 198 | 141 | 339 | |||||||||||||||||||
Net loss | $ | (34,763 | ) | $ | 25,082 | $ | (9,681 | ) | $ | (14,364 | ) | $ | 10,234 | $ | (4,130 | ) | |||||||||
Net loss attributable to common stockholders - Basic and Diluted | $ | (34,763 | ) | $ | 25,082 | $ | (9,681 | ) | $ | (14,672 | ) | $ | 10,234 | $ | (4,438 | ) | |||||||||
Net loss per share attributable to common stockholders: | |||||||||||||||||||||||||
Basic | $ | (0.26 | ) | $ | 0.19 | $ | (0.07 | ) | $ | (0.55 | ) | $ | 0.38 | $ | (0.17 | ) | |||||||||
Diluted | $ | (0.26 | ) | $ | 0.19 | $ | (0.07 | ) | $ | (0.55 | ) | $ | 0.38 | $ | (0.17 | ) | |||||||||
Weighted-average shares used to compute net loss per share attributable to common stockholders: | |||||||||||||||||||||||||
Basic | 132,298,095 | — | 132,298,095 | 26,452,100 | — | 26,452,100 | |||||||||||||||||||
Diluted | 132,298,095 | — | 132,298,095 | 26,452,100 | — | 26,452,100 | |||||||||||||||||||
(1) Adjustments include stock-based compensation and the related tax effect. | |||||||||||||||||||||||||
ServiceNow, Inc. | ||||||||||||||
Non-GAAP Billings Reconciliation | ||||||||||||||
(in thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | ||||||||||||||
June 30, | March 31, | June 30, | ||||||||||||
2013 | 2013 | 2012 | ||||||||||||
Total revenues | $ | 102,222 | $ | 85,939 | $ | 56,774 | ||||||||
Deferred revenue, end of period | 210,040 | 194,765 | 131,069 | |||||||||||
Less: deferred revenue, beginning of period | 194,765 | 170,361 | 115,757 | |||||||||||
Billings | $ | 117,497 | $ | 110,343 | $ | 72,086 | ||||||||
ServiceNow, Inc. | ||
Reconciliation of Non-GAAP Financial Guidance | ||
The financial guidance provided below is an estimate based on information available as of July 31, 2013. The company’s future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from the guidance set forth below. Some of the factors that could affect the company’s financial results are stated above in this press release. More information on potential factors that could affect the company’s financial results is included from time to time in the company’s public reports filed with the SEC, including the company's Annual Report on Form 10-K filed on March 8, 2013, the company's Form 10-Q for the quarter ended March 31, 2013 filed on May 8, 2013 and the company's Form 10-Q for the quarter ended June 30, 2013 to be filed with the SEC. The company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. | ||
Three Months Ended | ||
September 30, 2013 | ||
Non-GAAP subscription gross margin | 75% | |
Stock-based compensation expense | (2)% | |
GAAP subscription gross margin | 73% | |
Non-GAAP professional services and other gross margin | 7%-9% | |
Stock-based compensation expense | (9)% | |
GAAP professional services and other gross margin | (2%) - 0% | |
Non-GAAP total gross margin | 65% | |
Stock-based compensation expense | (4)% | |
GAAP total gross margin | 61% | |
Non-GAAP operating margin | (3%) - (2%) | |
Stock-based compensation expense | (17)% | |
GAAP operating margin | (20%) - (19%) | |
Non-GAAP basic and diluted net loss per share | ($0.03) - ($0.02) | |
Stock-based compensation expense | $(0.14) | |
Incremental non-GAAP tax expense (1) | $0.01 | |
GAAP basic and diluted net loss per share | ($0.16) - ($0.15) | |
(1) Incremental non-GAAP tax expense reflects the increase to GAAP tax expense related to the non-GAAP stock-based compensation expense adjustments. | ||